Chris Preston on Hiring Sales Leaders: Notes For Start-Up & High-Growth Businesses

I often work with clients who are looking to make a first senior sales appointment.  This is usually in the context of recently having received seed or early investment for a commercially viable and scalable product or service.

Either way a sales leader is likely to be critical to continued success and understandably the recruitment process is often approached with a reasonable degree of trepidation by Founders, Investors or Management Teams given the importance of the appointment.

This article is designed to share a few insights in to how this group of people should go about hiring a sales leader assuming it is likely to be the first time they’ve sought an externally hired Head of Sales or Sales Director.

Hunter or Farmer?

Step one, what are the key activities that will enable your business to make more money?  The obvious answer will be to ‘sell more units’ or ‘acquire more subscriptions’.  Depending on the age and stage of any given organisation, the average deal size, average sales cycle and total addressable market – business ‘A’ may decide that the critical activity to increase revenues will be to ‘farm’ and develop more revenues from existing customers while business ‘B’ might recognise that the route to success is to acquire increased numbers of new customers or clients.  Which ‘lever’ for growth will influence whether you need a ‘hunter’ or a ‘farmer’ – or a combination of both.  Add to this considerations around whether a further aim will be development of a sales function, a team or automated structure – or are you looking for a ‘lone wolf’?  At Zeren, when consulting with clients on this question we use a simple but important matrix for helping discuss and define the requirements based on key ‘levers’ for future growth.  Once you have the key levers, you can identify the type of candidate and then you’ll need to think about remuneration and incentives…

Experience (Customer vs Product or Service)

Should we focus on trying to find a direct competitor?  Sometimes, yes.  Sometimes, no.  There won’t always be the option and indeed outside thinking is often encouraged, but assuming you may not be able, or may not want, to find someone selling a competitor product or service to a similar customer base; where should the priority lie?  Without a doubt, the most important requirement should be on the Customer base (the ‘who’) rather than the product or service (the ‘what’).  In high growth businesses, looking to rapidly scale, the short cut will be hiring a sales leader who can quickly connect with your target audience, leveraging experience and networks.  As long as you also hire an intelligent person with experience in a relatively similar product or service area then they should learn your specific product or service quickly.

Experience (Candidate Background)

Clients will have, I am sure, preferences on specific companies, universities and other CV points but experience recruiting for start-ups and high-growth businesses tells me that that there are 2 tried and tested general rules that work:  MNC experience mixed with start-up or SME exposure.  Candidates with structure and process, best practice and the lessons learnt from managing up, managing down, competing with colleagues and, importantly, thriving.  Allied with all this wonderful training and development and learning ‘what good looks like’, is exposure to working in much smaller, agile, ‘scrappy’ environments.  There are various versions of what this might be but could also include working in a smaller, autonomous business unit of a larger organisation.  Classically we are asked to find someone who has done 8 to 10 years in an MNC, followed by 2 to 4 years in a smaller business.  The reason I have referred to these as ‘rules’ is that all too often we hear stories of start-up or scale-up clients hiring direct from a much larger corporate and taking a candidate who has only worked, albeit very successfully, in a very large organisation, only to see them flounder and fail in a business without daily PA support, on-going training, a huge marketing department, business class travel and annual trips to Las Vegas with the CEO…

Personality – Important?

Yes.  Very.

I recently spoke with a client who had hired a sales leader based on experience, track record, references, solid interviews and many other sensible decision points.  So far, so good.  However, he conceded that all through the interview process he had worried that he just didn’t really like this candidate much but resolved to ‘make do’ as the potential upsides were so great.  In a small business, in a small office, where month-to-month sales pressures are a continuous consideration, the one thing that will bind a team together, or tear it apart – is a shared vision and desire to work and succeed together.  You don’t have to want to move in together and holiday with each other’s families but you have to like, respect and want to see individuals in the team thrive.  My client had seen the cracks appear in the third week and the candidate left in the second month.  A new recruitment process followed and ultimately sales volumes suffered, and business growth was delayed by at least 9 months.

Don’t compromise on personality fit.  It simply isn’t worth the pain.

Ability, Track Record & Future Approach

Sales candidates will sell themselves more proactively, and with more vigour than candidates in other functions and you should be prepared for this and indeed, be encouraged by it.  Quality and detailed references should be taken sooner rather than later and we are invariably asked to take references from previous clients as well as employers, to assess candidates fully.

When meeting with sales candidates, it is increasingly important to ensure that potential sales leaders can evidence times of seeking out and implementing new sales practices to reach new customers and find new routes to market.  The most obvious example in recent times is that of ‘social’ selling.  This is the idea that cold calling and traditional methods of prospecting in a B2B environment are now less relevant in a world where everyone is more connected, more informed and more accessible than ever before.  My own experience of a first sales job involved a copy of the yellow pages and a phone and many current sales leaders will have similar anecdotes, but it will be critical they leave them as (fond?) memories, rather than current practices and embrace new methods that suit modern purchasers.

Remuneration

To coin a phrase: do not let the perfect be the enemy of the good.  A compelling remuneration structure to attract the best sales leaders will inevitably need to involve a significant variable and bonus element.  To structure this properly there is a need to understand current and future sales volumes and what is realistic.  Add in to this a probable plan to hire new people to grow the sales team and you have a potentially complicated and fast changing incentive structure.

The bottom line here is that there is no need to build a structure straight away for the long term and many clients we work with have a Year 1 bonus structure that is straight forward and there to attract and clearly incentivise the new sales leader, with an understanding that after the first year, a more formal incentive plan will be developed.

So often, high growth companies just need to focus on building momentum, generating sales and hiring people.  Sales leaders lead from the front and need to be looked after.  Once year 1 is out of the way, medium term planning, forecasts and incentives (based on lessons learnt and sales made through year 1) can happen.

A note on Equity.  There are many different variations on this but a key lesson that European start-ups and high-growth businesses have learnt from Silicon Valley is that one of the key ingredients for success is employee ownership.  Index Ventures have recently released their updated Handbook on all things to do with Employee Stock Options so I would encourage any business owner or CEO to read this as a first point of reference – it’s freely available on their website.

As the author makes note; when asking senior team members at a start-up to go on a journey, searching for treasure, the key employees want to share in the treasure that is found.  Sales leaders invariably directly influence just how much treasure is found – so look after them – or someone else will!

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